The UNSPSC is a hierarchical classification, having five levels. The levels allow users to search products more precisely (because searches will be confined to logical categories and eliminate irrelevant hits) and it allows managers to perform expenditure analysis on categories that are relevant to the company’s situation.
Each level contains a two-character numerical value and a textual description as follows:
The logical aggregation of families for analytical purposes
A commonly recognized group of inter-related commodity categories
A group of commodities sharing a common use or function
A group of substitutable products or services
XX Business Function
The function performed by an organization in support of the commodity
In the UNSPSC classification, products and services are placed within logical categories so that people can more easily find what they are looking for and evaluate expenditures on commonly grouped items.
For example, the commodity “pen refills” is part of a larger class of products, “Ink and lead refills”, which in turn is part of a family of products, “Office supplies,” which is itself part of a segment of products, “Office equipment, accessories, and supplies.” Each level of the hierarchy has its own unique number.
Hierarchy Category Number and Name
Segment 44 Office Equipment, Accessories and Supplies
10 Office Machines and their supplies and accessories
11 Office and desk accessories
Family 12 Office supplies
15 Mailing supplies
16 Office supplies
17 Writing instruments
18 Correction media
Class 19 Ink and lead refills
01 India ink
02 Lead refills
Commodity 03 Pen refills
“Pen refills” = UNSPSC classification 44-12-19-03.
The hierarchy allows people looking for pen refills to use the higher level terms to narrow their search to the relevant domain that will most likely lead them to the desired item.
In post facto analysis of spending, purchasing managers can evaluate expenditures according to any level of the hierarchy. Companies that use significant amounts of writing utensils and supplies, such as architectural, graphic arts, and printing companies, may want to analyze spending on the class or commodity levels. Such analysis will allow them to spot opportunities where they can consolidate suppliers, find better sources, negotiate volume discounts, and similar optimizations of their supply chain. Companies where these items are not a significant portion of their spending, may elect to analyze spending on the higher family and segment categories only.
The UNSPSC can be further extended by adding a ninth and tenth digit after the commodity number. These numbers can indicate business relationships to the supplier such as rental/lease, wholesale, retail, or original equipment manufacturer (OEM).